Haha, that’s me, I’ve been on the mindset to save so much, that I’ll have a difficult time to switch and start spending when the time comes! Great videos, I always enjoy them!
It can be hard to “switch to spending mode” upon retirement. This is because your employment paycheck stops. Advice: Do the math (head over heart). Early retirement will be your best years (mostly based upon health), thus, spend most freely. EG: I retired last year. One thing I always wanted to do was take a Motorhome Vacation. I rented one and we had a blast. Renting adult toys (boats, Wranglers, Slingshots, Motorhome) is a great way to go (no long-term obligations on a depreciating asset).
EXCELLENT VIDEO! Because RISK matters, and there is risk in EVERY decision - even risk in doing nothing or doing too little too late, or too much too soon, etc - just like deciding to not make a decision is a decision. Your approach and advice are very "holistic" and wise, which is unusual from a financial advisor, and so very very welcome. thank you ♡♡♡
I think #4 is a big one. As a parent I understand the urge. But the reality is that if I want to set myself up for success, I need to approach our finances with my brain rather than my heart. And if you’re struggling to have your brain take over, look at it this way: one of the biggest gifts you can give your child is your own financial security. At the end of the day, if you don’t set boundaries with them when they’re young, you’ll end up in their care as you age because you won’t have enough to provide for yourself, thus continuing the cycle.
I would add another mistake which is having a mortgage in retirement. Either pay off your house or downsize to one you can afford. A mortgage is a big fixed drain on your retirement income and huge financial obligation that can create anxiety. Similarly, it might be a mistake to retire in a high tax state. The ways different states tax real estate and retirement income and 401k distributions can vary drastically.
Is it a mistake to assume that bond funds are safe? The old rule was to have a larger % of one's portfolio in bonds as to approach retirement. But bonds don't even keep up with inflation and I am worried that the debts on bonds will never be repaid and/or countries like China will dump their US bonds and crash the bond market. Could bond funds crash and never recover? I long term invest in the S&P 500 for built in diversity, with no individual stocks. Yes, it can go way down on bad news, but historically it has always recovered, and America still seems to be the best place to do business. Since Donald Trump was elected, my net worth has doubled and I am in the exponential end of the growth curve after 28 years of investing. That wouldn't have happened with bond funds.
bond funds being safe depends on the bond fund and your goal. This is not a one size fit all answer You most likely want to keep some percentage in fixed income but not necessarily bonds when you retire in case of a long bear market. Of course that being said historically in most cases you're better off with 100% stocks if you're looking at return only. Bonds basically don't keep up with inflation especially after taxes. The goal of fixed income in retirement is to have something to withdraw with in case we have a bad bear market and especially a long bad bear market. Bond funds will always recover. The question is how long will it take and that will depend on your choice. The S&P 500 is not really diversified. It's all large cap US stocks. Do you remember from 2000 to 2010 with a return of zero No bonds in general will not give you stock like returns. And they're not supposed to bonds do not serve that purpose in general. Bonds are where you withdraw money in bear markets, hold specific money for a specific goal safely or get steady income
It is, how about for things like medicine or assisted care facilities. What you mean is 90 year old spend money on different things than 60 year olds. Statistically you will spend less but that doesn't mean everybody. Some people will spend a lot more, do you know the cost of a nursing home or in care home.
